I study the optimal integration of humans and technologies in multi-layered decision-making processes. Each layer can correct existing errors but may also introduce new ones. A one-dimensional quality metric – a decision-maker’s error correction capability normalized by its new errors – determines the optimal rule: deploying higher-quality technologies in later stages. Interestingly, the final decision-making layer may not achieve the greatest error reduction; instead, its...

Many regulations aim at promoting coordination among creditors in bankruptcy by ex post restricting their ability to exit distressed firms. However, such restrictions may harm creditors’ ex ante incentives to stay invested, thereby worsening coordination outcomes. We build a dynamic coordination model to show how this force shapes creditor runs, bankruptcy filings, and regulation designs. Intriguingly, filing for bankruptcy early, thereby preserving more assets for...